The shares of Range Resources Corporation have decreased by more than -7.50% this year alone. The shares recently went down by -0.32% or -$0.05 and now trades at $15.78. The shares of MagneGas Corporation (NASDAQ:MNGA), has slumped by -90.42% year to date as of 06/06/2018. The shares currently trade at $0.46 and have been able to report a change of 0.63% over the past one week.
The stock of Range Resources Corporation and MagneGas Corporation were two of the most active stocks on Wednesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.Profitability and Returns
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. RRC has an EBITDA margin of 43.87%, this implies that the underlying business of RRC is more profitable. The ROI of RRC is -0.40% while that of MNGA is -143.90%. These figures suggest that RRC ventures generate a higher ROI than that of MNGA.Cash Flow
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, RRC’s free cash flow per share is a positive 1.24, while that of MNGA is negative -0.2.Liquidity and Financial Risk
The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for RRC is 0.50 and that of MNGA is 1.60. This implies that it is easier for RRC to cover its immediate obligations over the next 12 months than MNGA. The debt ratio of RRC is 0.70 compared to 0.06 for MNGA. RRC can be able to settle its long-term debts and thus is a lower financial risk than MNGA.Valuation
RRC currently trades at a forward P/E of 17.06, a P/B of 0.66, and a P/S of 1.50 while MNGA trades at a P/B of 0.21, and a P/S of 1.78. This means that looking at the earnings, book values and sales basis, RRC is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.Analyst Price Targets and Opinions
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of RRC is currently at a -24.79% to its one-year price target of 20.98. Looking at its rival pricing, MNGA is at a -92.33% relative to its price target of 6.00.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), RRC is given a 2.40 while 2.00 placed for MNGA. This means that analysts are more bullish on the outlook for RRC stocks.Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for RRC is 7.33 while that of MNGA is just 0.32. This means that analysts are more bullish on the forecast for MNGA stock.
The stock of Range Resources Corporation defeats that of MagneGas Corporation when the two are compared, with RRC taking 6 out of the total factors that were been considered. RRC happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, RRC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RRC is better on when it is viewed on short interest.